Groups representing Canada’s financial planning industry are generally pleased with the preliminary recommendations of Ontario’s expert committee for regulation of financial planning, but they point out that the devil is in the details and implementation remains a challenge.

Ontario’s Expert Committee to consider Financial Advisory and Financial Planning Policy Alternatives issued a report on Tuesday calling for the regulation of financial planners; harmonized licensing and proficiency standards; and the introduction of a statutory fiduciary duty. Further consultations will be carried out through the summer and the committee’s final report is due in the autumn.

The initial reactions to the report’s preliminary recommendations are mostly positive. Specifically, the Toronto-based Financial Planning Standards Council (FPSC) says it’s “pleased” with the preliminary recommendations, noting that, if adopted, they would likely improve consumer protection. The FPSC points out that it supports the regulation of financial planners, including the introduction of title restrictions, a unified set of financial planning standards and a best interests standard.

“Establishment for a single, harmonized set of standards is vital to protecting consumers’ financial well being,” says Cary List, president and CEO of the FPSC, in a statement. “In today’s world, well-intentioned consumers too often place their financial well-being in the hands of individuals who are not necessarily qualified or held accountable for their actions. Regulation that ensures appropriate proficiency, ethical obligations (including a mandatory provision that puts the client’s interest before all others), and accountability will help foster consumer trust in the profession. FPSC looks forward to playing a key role in such regulation.”

The Mississauga, Ont.-based Canadian Institute of Financial Planners (CIFPs) echoes the FPSC’s support for the recommendations. “CIFPs is very pleased with this report as a first step to regulating financial planning and more tailored financial advice regulation,” says Keith Costello, president and CEO of the CIFPs.

Costello notes that many of the committee’s recommendations are in line with the CIFPs’s submission to the committee last year. “We called for better harmonization of standards, a statutory best interest duty, titles and holding out restrictions, and an integrated central registry for investors for both financial planners and financial advisors,” he says.

“This report lays the groundwork to begin addressing these important issues for the benefit of both investors, and financial planners and financial advisors,” Costello adds.

Of course, as with any regulatory initiative, the details of the actual reforms are critical. And while there’s general support for the committee’s underlying recommendations, there’s also some concern about the specifics of any reform and how the recommendations fit into the existing regulatory framework.

For example, the Investment Industry Association of Canada (IIAC) — which also expresses support for the report and its recommendations, particularly its call to harmonize proficiency standards and the effort to avoid regulatory duplication in certain aspects of its proposals — also indicates that it has concerns with certain aspects of the report, such as its call for a statutory best interests duty and its recommendations regarding referral arrangements.

The IIAC also notes that there may be some overlap between the committee’s recommendations and the jurisdiction of existing securities industry regulators.

“The IIAC has previously made submissions to the [Canadian Securities Administrators (CSA)] regarding the unintended consequences and challenges of implementing a statutory best interest standard and looks forward to the CSA’s upcoming release of its consultation paper,” says Michelle Alexander, vice president with the IIAC. “Furthermore, an Ontario-only solution, as proposed by the expert committee, would be unworkable.”

Investor advocacy group the Canadian Foundation for Advancement of Investor Rights (a.k.a. FAIR Canada) also supports the general aim of the recommendations, but says that it needs to see more detail from the committee in its final report to ensure that the reform that results is meaningful and effective.

“They need to provide guidance to ensure that financial planners’ proficiency standards are set at the highest level, not the lowest common denominator among the many practices currently used,” says Neil Gross, executive director of FAIR Canada.

“They also need to specify what the best interest duty will require, particularly for financial planners who are not operating on a fee-only basis,” he adds. “It’s easy to say, ‘You must put your client’s interests ahead of your own.’ But what’s really needed is clear direction regarding financial planners’ obligations to avoid conflicts of interest and maintain sufficient independence to reasonably optimize the advice they give.”